We all know SMEs constitute one of the pillars of the Indian economy. However, it is also a fact that financial distress rate amongst the SMEs is alarming and this is despite the Government doing its best to help SMEs in every possible manner. Such SMEs can now hope to come out of such difficult phase courtesy IBC 2016.. Being an ex-banker, I am aware about the ground level realities and will be able to pin point the reasons for distress as also the solutions needed. However—at the same time—I must caution against blind reliance on the material provided through this website because each SME will have a unique set of problems and an in depth—and separate– study is needed to diagnose the problem. Lastly this is an educational website and no income of any sort is being contemplated.

Banks told to be vigilant on Aadhaar – The Hindu–26.03.2018

Use OTPs only in the presence of customers: UIDAI

The Unique Identification Authority of India (UIDAI) has asked banks to provide Aadhaar-based onetime password (OTP) for opening of bank accounts only in the presence of the customer, in a banking outlet.

The direction is a huge blow to the banks that are heavily dependent on Aadhaar-based OTP authentication process for account opening (where the customers do not have to visit branches) or use tab banking to open accounts by visiting the customer’s residence.

“Banks may provide authentication and e-KYC facility (fingerprint, iris, OTP) at all banking outlets so that authentication/e-KYC can be done then and there in front of the customers,”the letter — a copy of which has been reviewed by The Hindu — said. The letter further noted that while banks are using various channels for collection of Aadhaar number from their customers, it was found by the UIDAI that the authentication of Aadhaar numbers was not carried out or authentication best practices were not followed.

“It has come to the notice of the UIDAI that there has been instances wherein: Aadhaar of person A got seeded with person B’s account to carry out fraudulent transaction,” the letter said.

“Stolen Aadhaar copy was used to open a bank account and obtain credit, debit card,” the letter said while citing another example.

The UIDAI said a fabricated Aadhaar card provided to a bank may result in fraud and loss of money, if the bank does not authenticate with finger print or OTP to adequately identify the Aadhaar holder.

According to RBI norms, there are limits for accounts that are opened through Aadhaar-based OTP authentication process, like deposits cannot exceed ₹1 lakh and full KYC requirements, which is submission of documents and giving biometric details, were needed to be made in 1 year.

Private sector lender Kotak Mahindra Bank, which had launched Aadhaar-based OTP authentication process for opening of accounts in March 2017, said last Tuesday that its customer base swelled from 8 million to 12 million within nine months of introducing the scheme. Since many other banks also offer similar schemes, bankers said account opening is likely to be hit following the UIDAI’s directions.